Chasing the market when you’re in the middle ground

It was Helmuth von Moltke the Elder, chief of staff with the Prussian army before World War 1, who said that no battle plan ever survives contact with the enemy. Today, for me, that mantra is as true for my DIY projects as it is for the theatre of war. No matter how well planned the project, there is always some unforeseen hitch that sends me scurrying to the DIY store for a solution.

There was a time when that was a two minute journey, and when I had a choice of either Homebase or B&Q. And conveniently, they were right opposite each other. But then, a couple of years ago, Homebase closed. Presumably the close proximity to its biggest competitor was doing neither brand any favours. Perhaps there simply wasn’t enough business to sustain two big DIY chains.

I thought no more of it until, a few months later, B&Q also closed down. The cynic in me says it was because, without the competition, B&Q felt it no longer needed a local presence in the town, because its matching superstore 10 miles away would still be the nearest DIY outlet. I now have a 20 mile round trip if a project needs saving.

Seemingly unrelated, the fiscally prudent Mrs Simms has been delighted in recent weeks to find that prices on many of her everyday purchases in Sainsbury’s have been significantly reduced, and our weekly shopping bill has come down by a hefty amount. As I trail dutifully behind her with the trolley up one aisle and down the next every Thursday evening, it’s frequently a topic of conversation: is it a slight strengthening in the pound? Is it part of a new supermarket price war? Or – and this must be particularly galling for Sainsbury’s – does it have anything to do with the fact that the Homebase outlet just around the corner that it previously owned, the much missed lifeline for my DIY projects which has stood empty for the past couple of years, has just been announced as a new Aldi superstore?

Part of the problem, I suspect, is that supermarkets like Sainsbury’s are finding it increasingly tough to compete in a market where they sit below the premium outlets like Waitrose but above the budget retailers like Aldi and Lidl. What’s the sales pitch for the companies in the middle ground, who don’t have the products to chase the premium market but who don’t want to join the race to the bottom in prices to take on the budget brands? And the problem is just as real in industry as it is in retail; if you’re not premium and you’re not budget, then what’s your differentiator?

One area where companies can differentiate is in service, and indeed the servitization (not my favourite word) of industry is seen as one of the key trends for the next few years. The companies who can back up their product offering with services that offer real benefits to their customers are going to be the ones that thrive in an increasingly competitive business environment.